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easyJet Seeks Another AOC Due Brexit

UK budget carrier easyJet is formally seeking another air operator’s certificate (AOC) outside of the UK following the June 23 vote to exit the European Union (EU), or Brexit.

“As part of easyJet’s contingency planning before the referendum we had informal discussions with a number of European aviation regulators about the establishment of an AOC in a European country to enable easyJet to fly across Europe as we do today. EasyJet has now started a formal process to acquire an AOC,” the airline said in a statement.

EasyJet holds two AOCs, one in the UK and one for easyJet Switzerland. Seeking an AOC in another EU country could protect its business, should the UK go ahead with its plans to leave the Bloc.

“Until the outcome of the UK/EU negotiations are clearer easyJet does not need to make any other structural or operational changes. We have no plans to move from Luton where we have been based for 20 years,” it said.

In the meantime, the budget carrier is lobbying the UK and EU to maintain access to the single EU aviation market.

IATA has said UK air passengers could decline 3%-5% by 2020 as a result of Brexit, following an expected economic downturn and predicted drop in the value of the UK pound.

Aviation policy will be a major challenge for the coming negotiations.

Re: easyJet Seeks Another AOC Due Brexit

Originally Posted by Jarwot

An interesting job for the guys tasked to implement the AOC. Not sure how it works, would the aircraft need to be registered in the new AOC country?

Yes, this would be relatively easy to do at the moment, nothing to stop any operator applying for an AOC in another EU country, one of the benefits of the EU and EASA is that you can move your A/C easily enough between AOCs with basically just an ARC transfer.

The first aircraft registered to easyJet Europe, OE-IVA, an Airbus A320, operated from London Luton to Vienna July 20.

EasyJet will slowly re-register the remaining 110 aircraft, which are required for its European Union (EU)-based operations into easyJet Europe over the next two winters. This process will be completed in advance of the UK leaving the EU, or Brexit. When this happens, ATW understands easyJet will become Austria’s largest carrier in terms of aircraft.

EasyJet’s network depends heavily on EU route rights. The EU AOC will safeguard the LCC’s network, should the UK and EU fail to agree on a new air transport accord before the UK exits the EU.

EasyJet Europe’s principal place of business will be in Vienna and its management will have full operational control and financial oversight of the company.

EasyJet is a pan-European airline group with three airlines based in Austria, Switzerland and the UK. All of these will be owned by easyJet, which will be EU-owned and controlled, listed on the London Stock Exchange, and based in the UK.

“Today’s announcement is the result of an extensive and thorough regulatory process in Austria and I am pleased to confirm that easyJet Europe is now flying,” CEO Carolyn McCall said in a statement.

“In addition, like all other European airlines, we continue to lobby for an EU UK aviation agreement which, as a minimum, will enable flights between the EU and the UK,” McCall said.

EasyJet country director-Germany, Austria and Switzerland Thomas Haagensen has been appointed as MD of easyJet Europe.

“As the process of re-registering easyJet’s EU27 aircraft to the Austrian AOC continues over the coming months, I look forward to working with my team and Austro Control to ensure that easyJet Europe’s operations continue to meet the highest operational and safety standards,” Haagensen said.

EasyJet Europe will create a number of new jobs in Austria, but no jobs will move from the UK to Austria. All of easyJet’s UK employees will continue to be based in London Luton and its 11 UK bases, and be employed as they are today, according to Haagensen.

EasyJet currently bases around 100 aircraft and employs around 4,000 people across six EU27 countries that will form the basis of easyJet Europe.

ATW understands the Austrian AOC is essential for easyJet as half of 75 million passengers annually come from the EU’s 27 member states.

EasyJet has operated flights from Austria for 11 years. The carrier has transported 1 million passengers from four airports in Austria to 20 European destinations so far this year.

The LCC flies over 260 aircraft on more than 870 routes to over 138 airports across 31 countries.

Re: easyJet Seeks Another AOC Due Brexit

UK LCC easyJet confirmed Dec. 15 that it had cleared the regulatory hurdles surrounding its acquisition of part of bankrupt airberlin’s assets at Berlin Tegel Airport.

In a statement to the London Stock Exchange, easyJet said the acquisition will result in the London Luton-based LCC operating 25 aircraft from Tegel and that the agreement included easyJet leasing former airberlin aircraft, taking over other assets including slots, and offering employment to former airberlin crews.

EasyJet has previously estimated the costs of acquiring the leases to 25 of airberlin’s Airbus A320s and some of the German airline’s slots at €40 million ($42 million), but that this figure excluded certain potential startup and transition costs.

Describing the event as a “milestone,” EasyJet’s new CEO Johan Lundgren added the airline “looks forward to building on the presence we already have in Berlin to bring more choice and lower fares to consumers and support more economic growth in the states of both Berlin and Brandenburg.

“This move is consistent with easyJet’s strategy of purposeful investment in strong number one positions in Europe's leading airports. As a result of our acquisition, easyJet will operate the leading short haul network at Tegel connecting passengers to and from destinations across Germany and the rest of Europe,” Lundgren said. “This is in addition to easyJet's existing base at Berlin Schönefeld and means that easyJet will be the leading airline to and from Berlin.”

Re: easyJet Seeks Another AOC Due Brexit

The UK government has confirmed easyJet’s status as a UK airline, even if it is European Union (EU)-owned, according to comments made by easyJet CFO Andrew Findlay.

The comments came as the UK prepares to exit the EU (Brexit), triggering UK and EU airlines to review their ownership structures.

“To operate in Europe, you have to be majority EU-owned,” Findlay said on a recent easyJet webcast. “Obviously, when the UK exits the EU, that will require above 50% ownership by the EU27.”

He added that easyJet is already “very close to that percentage.”

Earlier this year, the airline’s shareholders agreed to give easyJet the power to limit the ownership of its stock by non-EU shareholders, so that the company remains EU-owned and controlled at all times after the UK has left the EU, allowing easyJet to continue to fly between and within EU countries post-Brexit.

“In the UK, to operate, you need to be a UK airline. We have agreement from the secretary of state that we are a UK airline as well, even though we may be EU-owned, so we’ve got all bases covered. That’s the plan. It is complex, but we’ve covered every angle.”

ATW understands the UK’s exact policy is still under negotiation, but the government is looking to support business and consumer interests post-Brexit.

“Aviation is crucial to the UK’s economy and we are committed to getting the best deal possible for Britain. The government will ensure that our aviation sector continues to thrive and that passengers and businesses benefit from competitive fares and international connections,” a UK Department for Transport spokesperson said.

From a safety regulation perspective, to mitigate the impact of Brexit, easyJet will operate from two air operator’s certificates (AOCs) - one in the UK and one in Austria - in addition to its existing Swiss AOC.

“What we will have is a central group operating structure that will provide services to both of those AOCs,” Findlay said, adding that both the UK and Austrian CAAs have approved this structure.

By: Victoria Moores

NS Comment: EasyJet is pursuing post-Brexit survivability. But this may not be the only Brexit-proof solution. Good old "Bilateral Air Services Agreements" may be useful without establishing elaborate structures.